Meanwhile, the company's gross merchandise volume (GMV) — the total value of goods sold through its site — rose an impressive 46% YoY. For all of 2016, JD.com reported $37.5 billion in revenue, up from $26.4 billion in 2015, and a 44% increase in GMV to $94.8 billion.

Alibaba's revenue growth rate for Q4 (54%) was actually higher than JD.com's, but the latter has been slowly gaining market share on Alibaba in China's gigantic e-commerce market over the past couple of years.

JD.com had a 25% share of business-to-consumer (B2C) e-commerce sales in China in 2016, while Alibaba's Tmall marketplace had a 57% share.

That's up from JD.com's 18% market share in Q4 2014, when Alibaba's share was 61%.

JD.com has been able to gain that share by using a different business model than Alibaba and building out its own extensive logistics network.

Alibaba acts as a marketplace for merchants and consumers to sell their goods.

JD.com also offers a marketplace for sellers, but that marketplace only generates 6% of its revenue. Most of JD.com's revenue comes from direct sales for which it acts as the merchant.

By selling direct to consumers, JD.com is responsible for delivering items itself, and the company has developed a vast logistics network that includes more than 250 warehouses throughout China and a recently expanded drone delivery program.

Expanding that logistics network is expensive though, and shoppers also usually have to pay more for goods on JD.com than with Alibaba. That's because Alibaba encourages merchants to drive down their prices to compete with the thousands of other merchants on its marketplaces.

In order to help pay for logistics costs and pricing discounts, JD.com said it would sell its JD Finance online finance arm for $2.1 billion to a group of Chinese investors. JD.com will also receive 40% of JD Finance's pretax profits after the sale. The online retailer can use that money and its gains from the sale to invest in further expanding its logistics capabilities and offering more discounts to attract new and repeat customers. If JD.com can reduce its prices while also building on its reputation for fast and reliable delivery, it will be well positioned to take more market share from Alibaba.